Does IBM Watson use machine learning?
Yes, it does and at many parts of the solution. For one of the core components - intent detection - Intento did a benchmark comparing IBM Watson and other similar products: https://www.slideshare.net/KonstantinSavenkov/nlu-intent-detection-benchmark-by-intento-august-2017

Outside of intent detection, there are other areas where AI techniques help - e.g. disambiguation, bootstrapping a bot from chat logs etc. Specifically for IBM Watson, you can learn more here: https://www.ibm.com/cloud/watson-assistant/features/